Charts And Commentary

8/20/2003



chart from http://futures.tradingcharts.com/

8/20/2003

Euro put in a double top, failed to break past 119, 118.5 is point to sell. 

First easy target is 112.00 

Second target 108 and third target is 1.05 

A very extreme target is .96  ( though I recommend taking profits in the 105-108 region, my first target has been hit already)

 The fundamentals in the Euro have not changed much, still just as rotten as before, what happened was people were jumping form one rotten currency to one that was perceived to be less rotten. It would also be wise to go long the dollar in the .92 range, while shorting the Euro. I expect the dollar to put in a multi quarter high and its not inconceivable to see the dollar at 1.02 plus in the near future. 

This would be mean that Gold should start to correct, the meteoric rise  in Gold shares have been partly due to the fact that so much money left the bond markets that some of it had to filter into the gold and silver sector, being that this sector is so small a very slight change in money flow can have far reaching effects. The fact that bullion has not made new highs supports this theory that it's just money swishing around from one sector to the other in search of the next hot item, after all Gold shares are still paper.

Therefore it is highly likely that Gold and silver should consolidate soon this consolidation should extend well into October to early November .

 9/15/2003

The fact that Gold has reached 380 plus and has not pulled back seriously, means that the above scenario is likely to be delayed, it is now possible for Gold to challenge 400 and maybe even 420, but it would be doing it when  all technical indicators and  Psychological indicators are extremely  bullish (as a contrarian this is not a positive sign as the general public or the masses are never correct), in addition Gold is now in the extreme range of the esoteric cycles and as rule its not good to take long term positions when anything stock, commodity or any tradable instrument is in this region. So for now Gold is only a traders play and we will hold onto positions only that were taken in  2000, Nov 2002 and march 2003 in our long term portfolio, any other positions that we might take will be very short term and will be done in our trading portfolio.



Additional Charts of Interest,  9/17/2003



looking at the above chart its very easy to see that the Dow was moving up and down in terms of the Euro, just as it did in terms of the US dollar, however fast forward to 2003 and basically you see that the Dow is flat, even though we have kept hitting new yearly highs, what this suggests that in terms of the Euro the Dow is stagnant and it is only moving in terms of the deflated US dollar which at is bottom had dropped more than 30% against the Dow, given that the Dow was around 7400 at its low, adding 30% to this gives a target of 9620 plus or minus a few hundred points. unless the dollar keeps dropping the Dow should top in this region of 9600-9800 or we actually begin to rally in terms of the Euro dollar and then we can officially call this a new bull market, however unlike any other bull market this will be a purely liquidity driven one .





This chart is self explanatory, since 2000, the amount of silver and gold via the XAU index the Dow could buy has been dropping. We are now reaching an important cross road and have just put in a triple bottom (the 100 mark area on the chart above), the only way to maintain this bottom is for the Dow to keep rallying along with XAU, should that line be violated and we break the 100 zone, then we could see significantly higher Gold prices, that line will be broken eventually, however it would make sense for Gold and Silver to take a breather soon, before rallying again